Sydney, Oct 20, 2008 AEST (ABN Newswire) - Wall Street closed weaker on Friday with fluctuations that has become a standard in recent weeks and further turmoil overseas is likely to prompt fresh slides for Australia markets. Last Friday the Australia benchmark S&P/ASX 200 index lost 42.6 points, or 1.1%, to 3970.8, after rising as much as 3.4% in the morning. The broader All Ordinaries lost 43.3 points, or 1.1% to 3944.8.

In late morning trade, the December Share Price Index futures contract on the Sydney Futures Exchange was down 21 points at 4,030.

The Australian dollar has opened higher as a report suggests the Reserve Bank may be less aggressive with its monetary policy easing in the months ahead. At 0700 AEDT, the Australian dollar was trading at 69.71/78, up from Friday's close of 68.88/92. Analysts said the Australian dollar could push higher this week, but conditions were expected to remain volatile given the uncertain global picture.

Oil prices have recovered some ground, rallying above US$71 a barrel on speculation that OPEC could slash output in an effort to stop crude's downward spiral. Light, sweet crude for November delivery rose US$1.98 to settle at US$71.85 a barrel on the New York Mercantile Exchange after earlier rising as high as US$74.30.

Key Economic Facts and Figures

Economists from the National Australia Bank are predicting growth could slow to just 1.25 per cent by mid-2009, a decline that would push unemployment to six per cent. It is predicted an interest rate cut to 4.5 per cent and unemployment at about 6 per cent by the end of the year, meaning the loss of 200,000 jobs.

The Reserve Bank of Australia (RBA) cut the cash rate by a full percentage point, Economists expect the headline consumer price index (CPI), the key measure of inflation, to record a rise of 1.1 per cent in the September quarter for an annual pace of 4.9 per cent. The Australian Bureau of Statistics (ABS) will release the CPI data on Wednesday.

The federal Government is poised to announce key details of its wholesale funding and deposit guarantees. This includes the fee paid by banks to "rent" the AAA-sovereign debt rating, and measures to ease recent disruption to the bank bill market.

Today the Australian Bureau of Statistics releases its producer price index for the September quarter.

M&A News

Onesteel(ASX:OST), Australia's second largest steelmaker, has terminated its A$157 million takeover of New Zealand-based Steel & Tube Holdings Ltd(NZE:STU), citing increased market volatility. OneSteel holds a 50.27 per cent interest in Steel & Tube, was offering $NZ4.00 for every share in the company it doesn't own.

GRD Limited(ASX:GRD) said it remains in the process of finding a European partner for its Global Renewables business. Utilising patented technology, which turns household garbage into fertiliser or gas, Global Renewables remains a source of income for GRD's flagship engineering arm, Minproc.

Macquarie Airports'(ASX:MAP) sale of A$1.5 billion of assets and A$1 billion buyback of securities has been approved by security holders at a meeting in Sydney. MAP will sell its 27 per cent stake in Copenhagen Aiport and 26 per cent in Brussels Airport to fellow Macquarie entity Macquarie Infrastructure(ASX:MIG).

Coal producer Felix Resources(ASX:FLX) has been forced to delay the announcement of a takeover due to ongoing market volatility. Potential buyers for the company are thought to including BHP Billiton(ASX:BHP) and Brazil's Vale.

Important Corporate News

OZ Minerals(ASX:OZL) says it has no plans to slow its expansion projects despite the looming global slowdown. The company expected a recovery in China in early 2009 to propel metal prices higher, and believed its low production costs would help it during today's low-price environment.

The National Australia Bank(ASX:NAB) has stated its net profit will be A$3.9 billion and in line with consensus. It also flagged plans to strengthen its capital position by raising about A$2.5 billion through a dividend reinvestment program and said it had the option of issuing hybrid capital.


Michelle Liang
Asia Business News Asia Bureau
Tel: +61-2-9247-4344

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